Dealers: Doing the Downturn

March 1, 2001
All over the country, fleets and truck dealers are having the opportunity to give their business relationships the shake test of tough times. For veterans of past industry cycles and for those on their first heart-pounding ride down, the view from the bottom of the curve affords unique perspectives on the enduring importance of relationships to success. The plain fact of the matter is that you can't

All over the country, fleets and truck dealers are having the opportunity to give their business relationships the shake test of tough times. For veterans of past industry cycles and for those on their first heart-pounding ride down, the view from the bottom of the curve affords unique perspectives on the enduring importance of relationships to success.

“The plain fact of the matter is that you can't only be there for your customers when times are good,” observes Brad Kerr, director of national accounts for Rush Truck Center, Houston, a Peterbilt dealership. “You have to be constant. Trucking is a very long-term relationship business. If you and your customer go through a trade cycle and a downturn and you're still together, that's when you know you've built a real relationship.”

“When the industry hits a time like this, that's when relationships really matter,” agrees Kirk Plagman, president of City International Inc. “You can't just sit back and take a wait-and-see approach. You've got to jump right into the middle of things and work harder than ever on behalf of your customers.”


Jumping into the middle of things is, of course, easier to do when times are good. But it's during tough times that it really counts, according to fleets that have successfully made it through past difficulties, thanks in part to help from their equipment dealers.

An oil well service company based in Texas, for example, is a loyal Rush Truck Center customer, thanks to its experiences during the oil industry's own slump, which hit bottom in 1999 before beginning its current recovery. “Once oil wells are drilled, our job is to help make them produce as much oil as possible at the lowest possible price, so our business is tightly tied to the number of working drilling rigs,” explains the assets manager for the company. “In 1999, the oil well rig count was the lowest since the 1800's.

“To make matters worse, since our industry is so cyclical we had equipment on order to be sure we'd be able to respond to our customers' needs. The fact that the equipment is very capital intensive, $800,000 to $1 million per fully equipped unit, only increased our risk and financial exposure when the market suddenly went soft,” he recalls.

“When things like this had happened in the past, we just had to take delivery of the equipment on order, costing us millions of dollars. This time, however, when we went to our dealer he said that if the trucks were not actually on the production line or the parts weren't ordered, they'd cancel the units, with the understanding that we'd be back as soon as our business turned around.

“During this same time, we were also having some problems with chassis in the field. In spite of our order cancellations, Rush treated us like we were buying 1,000 trucks a day,” he adds. “They put teams of mechanics together and did field retrofits alongside our own crew, on our work schedule. Since we run around the clock every day of the week, that often meant waking technicians up in the middle of the night when a vehicle was not on location and available for servicing.

“Working side by side, we got to be pretty good friends. Today, our dealer is like someone in another department of our own company. We trust him. It's a very open and honest relationship that's lasted for about five years now, and we expect it to last many more,” he notes. “When the market is down, there is a real opportunity to cement relationships. Sure, it costs you something, but you get it back in the long run many times over.”

The oil well service company's experiences during their industry's downturn offer useful insights to fleets and dealers trying to craft strategies to get through the trucking industry's current low, and rule number one is: communicate.

“Good communication is absolutely essential,” observes Brad Fauvre, president of Los Angeles and Las Vegas Freightliner. “My assumption is that there will always be issues between dealers and customers in the truck business; we're talking about mechanical devices and about people after all. But if you communicate and build up trust over time, then neither party makes decisions based only on the current transaction on the table. During hard times, fleets don't really ask for new services as much as they ask for better execution of the old things, the basics.”

“We expect our dealers to work with us as a team, in good times and bad,” agrees Allen Koenig, president of Midwest Specialized Transportation. “Tough times increase the pressure, but they don't change the rules of the game. And our basic business is to keep our trucks running in order to serve our customers.

“ We know there will sometimes be problems with trucks. We expect that and our dealers should, too. That means when problems occur, we also expect our dealers to be proactive,” he notes. “Our customers don't want to know about our equipment problems. If they did, they'd be running their own trucks.

“It's tough enough having trucks sitting waiting for freight, but it's a real killer to have a truck down because of mechanical problems,” Koenig adds. “So more than anything else, we expect our dealers and suppliers to help us keep our trucks rolling, no matter what it takes.”

“I expect our dealer salesperson to be our advocate,” agrees Pat Orscheln, an executive at Midwest Express Corp. “I like to be in the trucking business, not the truck business. My job is to find customers and move freight. We've never expected any favors from the dealer — no lunches or baseball tickets — we just want somebody we can trust, somebody we like to do business with. The state of the economy doesn't change that.”

Over the falls: a survivor&s guide

Fleets and truck dealers who've been over the market falls before and lived to tell about it generally agree that there are no special secrets to staying afloat until the industry resumes a smoother course. They do offer a few useful reminders, however, for doing business together during tough times. Their advice applies not only to dealer/fleet relationships, but also to working with your own customers.

  • From your customers' perspectives, business during tough times should look like business as usual, no matter what it takes. Know what your customer values the most and depends upon the most, and do those things even better.

  • Be as honest as you can, however, about the real issues you're facing. Not only will it gain you some empathy, but it may also open the door to new solutions.

  • Take the long view of your important business relationships. Don't focus so much on the deal of the day that you forget about the potential business waiting in the wings.

  • Be as bold as your resources permit during downturns. Slow times can be excellent times to grow your business, attract new customers and cement old relationships.

Remember that a business cycle is just that — and there's an upturn ahead as surely as there's a trough today.

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